Europe’s Real Crisis Isn’t Financial
Published on: October 19, 2011
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  • Kenny

    France can’t seem to survive in its present form unless some else is doing the heavy lifting.

    France would have lost WWI without U.S. intervention; they were KOed in the first round in WWII; in the Cold War, they were snug under the arms of America; after the Cold War, Germany supported them.

    Looks like to me the party’s over.

  • Rebekah

    I’d just like to thank Mr. Mead for both this insightful and eminently readable article, and the effort he has put into creating and maintaining this blog as a whole. I stumbled onto this site by perfect accident a month ago, and have been religiously checking it for updates ever since. No other news source I’ve visited combines the same degree of analysis, plain speech, and excellent writing style – and the free lessons are much appreciated. Here’s hoping he continues this blog far into the foreseeable future.

  • Ulrich Elkmann

    The robber chiefs have just wised up to the fact that their game is bust. Now they are shouting at each other in their den, with the safety off on the handguns to show that they mean business. If one were not caught with them in the cave, it might be fun to sit back and enjoy the ensuing fireworks.

  • willi f. moelzer

    By accident I stumbled across this wonderful report
    about the financial calamities of mainly France and Germany. The reporting is quite excellent and insightful and fully characterizes the existing and growing disparities between those two countries. I will continue to look for the hopefully ongoing reports regards this grand European dilemma.
    Willi F. Moelzer
    Eugene, Oregon

  • A Frenchwoman

    “Either France (and the rest of the Latins and Greeks) must live under German rules, or the Germans (and the other thrifty and orderly northern countries) must become more like Zorba the Greek.”

    The answer is obvious. The thrifty and orderly German(ic)s will enjoy the transition and we will be able to go on with our lives. The only thing blocking this road to heaven is Frau Merkel’s insufferable Protestant moralizing. But what can you expect from such a badly dressed person?

  • Ditto what Rebekah said.
    I discovered this blog years ago thanks to John Ellis and the late James Chace. Keep up the great work.

  • Snorri Godhi

    The EU looks to me (living inside it) like a Russian-doll scheme: the French ruling class rule France; France rules the Paris-Berlin axis; Paris and Berlin rule the EU and ECB; and the EU rules Europe. It’s like those families who have a 51% share of a company with a 51% share of a company…

    Having said that, I think that there is also an important conflict within “the thrifty and orderly northern countries”: a conflict between (to paraphrase Reagan) those who see government as the solution and those who see government as the problem. As long as the former outnumber the latter, especially in Germany, it will be difficult to resist French pressure to expand the powers of the EU.

    As for the Latins and Greeks, a significant minority of them seem to take the same “homeopathic” view as OWS: the government is the problem, and the solution is … more government. (And if my experience is any guide, too many British people see things the same way.)

  • Tom

    Great post Walter, as usual.
    You could have mentioned that, as part of the original Maastrict Treaty to establish the Euro, there was this Growth and Stability Pact treaty, to ensure that governments were responsible. But both Germany and France violated the terms of that pact, tho Slovakia, for instance, had to fully meet all the requirements to be let into the EU club.

    Since the re-unification of Germany, and a prior limited German gov’t expansion to bring the country back into a responsible and prudent position, other Euro countries have chosen continued and even increased violations.

    That treaty was signed, but essentially never enforced. A big part of the German reluctance to pony up money, for some signed treaty, is the real, and recent, experience that other countries don’t follow prudent treaty restrictions.

    I suspect Germany will leave the Euro, and take some other responsible countries with it — leaving France to lead Spain & Italy to inflate their Euro debt away.

  • The private sector soonest must decide to reinvest in jobs, doubling the rates. Job sharing and employing the Japanese management teamwork modle could be the remedial application to avert a full fledged depression.

    Europe has this route to save itself and the world economy dependent on its trade.

    Concentrate on the despairing, educated youth who have no hope without viable wages.

    The real estate sector needs to do some sacrificial applications.

    Halve the mortgage and rental rates asap.

    The above is what a real solution should include.

    Job sharing by two individuals working a three day workweek with some overlap in the interest of innovation and double oversight of a quality product or service, may serve as a model to reinvigor/invent capitalism back to its original heights.

  • It no longer seems credible to doubt the immediate collapse of the euro, followed by the EU. It always has been a fantasy.

    The problem isn’t that its collapse may well lead to war. That’s what Europeans do. The ONLY 45-yr period in the entire history of Europe from 1648 without near-constant warfare was 1945-1989, when sandwiched between the Warsaw Pact and NATO. Once the Pact collapsed, Europeans went back to war. And Americans, again, had to come stop it… or did they?

    One can look at the history of the European 20th Century as a history of America (and Britain) refusing to allow Natural Selection to work. Britain decided to save France in WW1. To what end? WW2? Indochina? Algeria? Perhaps a larger, strong Germany at Russia’s western border would have precluded the USSR? The ETO of WW2? The Holocaust? Korea? Vietnam? the Cold War? Islamist terrorism (had the Ottomans stayed more-or-less intact or not been divided up on the floor of the Brit FO)? It certainly would have precldued Khomenei.

    No – the problem when the EU collapses will be that some idiot America president again will be willing to sacrifice the lives of our men and women to the utter fantasy that Europeans can live in peace with one another. I’ve served. USAF. I will NEVER allow my 15-yr-old to be drafted into some army in 5 years to go fight on that completely deranged continent. I feel like Colonel Hackworth when he said, while commanding in Vietnam, that he would NEVER allow his son to fight there.

    I often say, in regard to the ME, just put a fence around the place, a phone booth in the middle, sell them all the ammo they want – call me when it’s over. I’m feeling about that charitable to Europe right now. All they know how to do is tell others how to behave and then go to war with each other.

    Europe needs to be treated by America as Rome treated Greece in Syracuse: Keep squabbling, go to war again and again with Rome coming over to sort it out, finally go home only to have the Greeks throw overnight bedpans on the Roman Consul. Having had enough, Rome sailed over, removed the museum objects from the city, moved the denizens to the surrounding fields, and razed the city.

    Well, Europeans recently spit on an American ambassador…..

  • vb

    I just saw on that the German government plans to cut taxes by 6 to 7 billion Euros in 2013. The CSU, (sister party of Merkel’s CDU) is not happy about being left out of the decision. This could make people a bit more tolerant of giving more money for the Euro crisis, but it certainly doesn’t signal any major changes about careful spending. People are being reminded that German jobs depend to a large part on European exports.

  • Pat

    Europe is a continent occupied by various diverse peoples with totally different backgrounds and totally different languages. To “unite” them a common set of laws is imposed by unelectable dictators- working on the fear that Germany will once again invade every-one (unlikely- the Prussian elite attitude is a thing of the past, as are the Prussian problems that gave rise to that attitude).
    Europe will only ever be united under some form of dictator (though I guess its better to have one who takes our money and our liberty rather than our lives).
    In the end European co-operation is easily attained- the Germans want to sell BMWs, others want to buy them, the Greeks and Spanish want to sell sunny holidays, others want to buy. The EU, and its pet currency are an irrelevant expense.

  • Bonfire of the Idiocies

    “Either France (and the rest of the Latins and Greeks) must live under German rules, or the Germans (and the other thrifty and orderly northern countries) must become more like Zorba the Greek.”

    Truthfully, I don’t see the latter as working in the long wrong. Socialism always fails precisely because nobody wants to work hard to benefit someone else unless it is a burden they WILLINGLY take on, like supporting their own family. But when the state imposes this “morality” on the individual, all ambition and productivity basically go out the window. So if Germany is somehow compelled to become the beast of burden for the Club Meds, the result will be “Hey, we’re ALL Greeks now! Pass the ouzo!” And what does a bunch of takers do when there is no longer anybody to provide stuff to take?

  • Kris

    “Germans are in any case allergic to President Sarkozy’s hyperactive negotiating style. The faster he tries to bounce them into some grand scheme, the more their go-slow instincts kick in. … Screaming at the Germans is usually not the best way to reach an agreement.”

    I believe the expression is “Schnell! Schnell!”

  • richard40

    I’m with the Germans on this one. Why should they be paying through the noze because they kept their budgets and inflation at reasonable levels, and are therefore the only ones that still have some money left. Its kind of like Texas having to give a bunch of loans to bail out California.

  • Joe

    Oh, I don’t know. French brokerage houses have done pretty well living by their wits in the jungle. Their problem is that their banking sector is twice the size of they GDP

  • A neutral Third World observer

    I have recently returned from a trip through Europe (visiting the Netherlands, Belgium, France, Spain and Germany) and one of the questions I asked almost everyone I spoke to, was: “What is your view on the eurocrisis and what should be done. Most people agreed that solidarity was important because as they put it: “After Greece and Portugal, we’re next.”

    This all changed when I got to Germany where many people (almost mechanically) replied that Germany should not have to pay for everyone else. I expected this answer from them and more or less agreed with them until I spoke to a young German man in Berlin. He explained that Germans had nothing to complain about because they needed the EU just as much as the EU needed them. “To whom do you think we sell our cars, electronics, chemicals and pharmaceuticals? To Greece, and Spain and the rest of the EU.” Thus his opinion was that Germany’s economy is able to stay so strong because of the availability of willing markets for its products in close proximity without any customs duties. While this point is not that of a professional economist, and is probably debatable, it does make a lot of sense and seems quite plausible. If it be true, then I suppose it would naturally lead one to believe that Germany should stop complaining and pay its dues, because even after bailing out some of the EU economies, it will continue to sell its products to them and make more money.

    And it is because of this symbiosis that I believe the EU will not split up any time soon. Yes many young, confused Germans might call for this split but the politicians and economists are much wiser and most likely will not allow it. Also there are many young Europeans (from all EU-nations) who like the idea of being an interesting smaller part of a very interesting greater whole. They like the fact that they are European and accept that therewith comes many priveleges and problems. And it is this belief in solidarity and in being ‘European’ that will truly save the EU, which is an inspiring experiment that seems to prove that despite many differences, people can work together and get along.

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